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                                                                    EXHIBIT 10.6

                      SEVENTH AMENDMENT TO PROMISSORY NOTE

         THIS SEVENTH AMENDMENT TO PROMISSORY NOTE (this "Seventh Amendment") is
entered into as of the 30th day of June, 2004, by and between DIVERSICARE
ASSISTED LIVING SERVICES NC II, LLC, a Delaware limited liability company (the
"Borrower"), and GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation
(the "Lender").

                                    RECITALS

         A. The Borrower executed to the order of the Lender that certain
Promissory Note dated June 4, 1999, in the principal amount of $12,480,000, as
amended by that certain First Amendment to Promissory Note dated July 1, 2002,
as amended by that certain Second Amendment to Promissory Note dated as of
October 1, 2002, as amended by that certain Third Amendment to Promissory Note
dated as of December 1, 2002, as amended by that certain Fourth Amendment to
Promissory Note dated as of January 1, 2003, as amended by that certain Fifth
Amendment to Promissory Note dated as of June 18, 2003, and as further amended
by that certain Sixth Amendment to Promissory Note dated July 1, 2003 (the
"Note"). Unless otherwise defined herein, capitalized terms shall have the
meaning assigned to them in the Note.

         B. The Borrower has requested that the Lender extend the Maturity Date
of the Note, and the Lender has agreed, upon certain conditions, one of which is
the execution of this Seventh Amendment.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the above Recitals and other good
and valuable consideration, the Borrower and the Lender hereby amend the Note as
follows:

         Section 4.1 of the Note, Maturity Date, is hereby amended to extend the
Maturity Date from June 30, 2004 until January 1, 2005. All references in the
Note to the "Maturity Date" are hereby amended to mean January 1, 2005.

         Except as expressly amended herein, the Note shall remain in full force
and effect in accordance with its terms and conditions.

         Notwithstanding the execution of this Seventh Amendment, the
indebtedness evidenced by the Note shall remain in full force and effect, and
nothing contained herein shall be interpreted or construed as resulting in a
novation of such indebtedness. The Borrower acknowledges and agrees that there
are no offsets or defenses to payment of the obligations evidenced by the Note,
as hereby amended, and hereby waives any defense, claim or counterclaim of the
Borrower regarding the obligations of the Borrower under the Note, as hereby
amended. The Borrower represents that there are no conditions of default or
facts or consequences which will or could lead to a default under the
obligations due from the Borrower under the Note, as amended herein, except as
any such Event of Default has been expressly

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waived in writing by the Beneficiary, or the Beneficiary has provided an express
written forbearance.

         Notwithstanding the execution of this Seventh Amendment, the
indebtedness evidenced by the Note shall remain in full force and effect, and
nothing contained herein shall be interpreted or construed as resulting in a
novation of such indebtedness. The Borrower acknowledges and agrees that there
are no offsets or defenses to payment of the obligations evidenced by the Note,
as hereby amended, and hereby waives any defense, claim or counterclaim of the
Borrower regarding the obligations of the Borrower under the Note, as hereby
amended. The Borrower represents that there are no conditions of default or
facts or consequences which will or could lead to a default under the
obligations due from the Borrower under the Note, as amended herein, except as
disclosed by Borrower and Diversicare Management Services Co. in that certain
Quarterly Compliance Statement & Census Data report and that certain Compliance
Certificate, each for the period ending March 31, 2004, and signed by Borrower's
Chief Financial Officer and Vice President.

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         IN WITNESS WHEREOF, the Borrower and Lender have caused this Seventh
Amendment to be executed by their respective duly authorized representatives, as
of the date first set forth above.

                                        BORROWER:

                                        DIVERSICARE ASSISTED LIVING SERVICES NC
                                        II, LLC, a Delaware limited liability
                                        company

                                        By: Diversicare Assisted Living Services
                                            NC, LLC
                                        Its: Sole Member

                                        By: /s/ Glynn Riddle
                                            ------------------------------------
                                             Glynn Riddle, Vice President and
                                             Chief Financial Officer

                                        LENDER:

                                        GMAC COMMERCIAL MORTGAGE CORPORATION,
                                        a California corporation

                                        By: /s/ Laura Y. McDonald
                                            ------------------------------------
                                        Its: Senior Vice President

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